BHP says Olympic Dam needs breakthrough to beat uranium slump

BHP CEO Andrew Mackenzie and Premier Jay Weatherill. BHP has said it is investigating leaching to extract copper more cheaply. The type of ore found in Olympic Dam has yet to be successfully leached on a commercial scale.
AFR

by
Simon Evans

BHP Billiton
chief executive
Andrew Mackenzie
says the slump in world uranium prices means even the existing Olympic Dam operations need to make more gains in productivity, and warned the resource giant requires a technological breakthrough to allow an expansion of the project.

Mr Mackenzie says BHP is likely to have something concrete to say about its progress on a potential expansion of the massive uranium, copper and gold mine in South Australia “within about a year’’.

He says conditions in the uranium market, where prices have fallen sharply since the Fukushima nuclear disaster in Japan in early 2011, mean BHP is focusing even more on productivity gains in both its existing operations and any future expansion.

“Right now mining is quite challen­ging," he said. “And we are facing particular challenges, as I’m sure you’d appreciate, in the uranium markets as a result of some of the concerns around the world about nuclear power. These are all adding impetus to us having to make big gains in productivity, not just within the new project, but actually within the current operations to maintain its competitiveness and viability."

Mr Mackenzie was speaking after an announcement at the Art Gallery of South Australia with SA Premier
Jay Weatherill
that BHP Billiton will inject $4 million into funding a national Ab­ori­ginal visual arts festival to be held in Adelaide for the first time in late 2015.

He says BHP is working hard behind the scenes on technology to improve the chances of a go-ahead of an expansion of the Olympic Dam project, located 550 kilometres north of Adelaide.

“We take the long-term view and we have to find something that’s econom­ic­ally competitive, and that does require a bit of a technological breakthrough,’’ he said.

“In simple terms, this equates to finding a cheaper method of mining using technological developments, rather than removing vast amounts of overburden in an open pit design under the original plan".

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Leaching investigated

BHP has said it is investigating the chemical process of leaching to extract the copper more cheaply. The type of ore found in Olympic Dam has yet to be successfully leached on a commercial scale.

When asked about the time frame for future decisions on Olympic Dam, Mr Mackenzie said: “I don’t want to raise expectations’’.

“We’ll, I think, have some things to say within about a year about the progress and how we’ll make best use of the generous extension to the indent­ure’’. This would be an update on how BHP Billiton sees the mine evolving into the future.

BHP Billiton shelved plans in August 2012 for a $30 billion expansion of Olympic Dam in a major blow for the South Australian economy. At that time, BHP Billiton’s then chief executive,
Marius Kloppers
, said the company would investigate a less-capital-intensive design for an expanded mine using different technology than origin­ally proposed.

The company was then granted a four-year extension by the South Australia government on the indenture agreement covering the mine expansion, and has been working on a substantial rescoping of the project.

Earlier this week, the SA government announced plans for a Future Fund investment vehicle funded from mining royalties to help pay for infrastructure to drive economic growth. Mr Mackenzie says BHP Billiton employs 4000 people in South Australia and pays $90 million in tax and royalties annually, which he said was a fair amount, but it wasn’t for him to comment on how that should be spent.

“I think it’s a decision for politicians and the people who vote for them as to exactly how those funds are used now and for the future, and I’ll leave that to them,’’ Mr Mackenzie said.